Budget 2015: ‘A budget for working people’

The Chancellor of the Exchequer George Osborne outside No 11 Downing Street. Picture: PA Wire

The Chancellor of the Exchequer George Osborne outside No 11 Downing Street. Picture: PA Wire - Credit: PA

Chancellor sets out his stall on tax credits, benefits and the next five years...

Chancellor of the Exchequer George Osborne delivers his Budget statement to the House of Commons. Pi

Chancellor of the Exchequer George Osborne delivers his Budget statement to the House of Commons. Picture: PA Wire - Credit: PA

Frozen fuel duty and a one per cent pay rise cap for public sector workers are among the latest points in a far reaching Budget currently being unveiled by the Chancellor.

It is also expected to include a package of dramatic welfare curbs, with the pill sweetened by tax cuts for middle-earners and those inheriting family homes.

He is expected to wield the axe on tax credits and housing benefit, reduce the overall benefits cap and announce that student grants are being scrapped.

Mr Osborne said the UK economy today is ‘fundamentally stronger than it was five years ago’, with living standards rising strongly.

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He said higher tax receipts meant he could implement a ‘smoother’ path to recording a surplus in the government finances, but stressed that he would not back away from tackling the deficit.

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“You only have to look at the crisis unfolding in Greece as I speak to realise that if a country’s not in control of its borrowing, the borrowing takes control of the country,” he said.

“Britain still spends too much, borrows too much, and our weak productivity shows we don’t train enough or build enough or invest enough.”

“This will be a Budget for working people. A Budget that sets out a plan for Britain for the next five years to keep moving us from a low-wage, high-tax, high-welfare economy; to the higher-wage, lower-tax, lower-welfare country we intend to create.

“This is the new settlement. From a one-nation government, this is a one-nation Budget that takes the necessary steps and follows a sensible path for the benefit of the whole of the United Kingdom.”

Mr Osborne is also set to take advantage of better-than-forecast tax revenues to declare that his £12 billion of welfare savings will be implemented more slowly than previously thought.

Pension pots

Millions of over-55s have since April been able to cash in their pension pots rather than being forced to buy an annuity.

Freed from the constraints of five years of coalition with the Liberal Democrats, Mr Osborne will use the Commons set-piece to slash the system of tax credits, brought in under the previous Labour government to top up the incomes of low-paid working families.

Child tax credits

Child tax credits are likely to be limited to the first two offspring, saving the Exchequer about £1.4 billion a year, and housing benefit will be abolished for young adults.

Mr Osborne is also going further than previously planned in cutting the £26,000-a-year benefits cap to £23,000 in London and lower in other parts of the country.

Savings of £250 million will be achieved by forcing 340,000 local authority and housing association tenants on incomes of £40,000 or more in London and £30,000 in the rest of England to pay a market, or near market, rent from 2017/18.

The £600 million-plus annual cost of providing free television licences to the over-75s is also being passed to the BBC from 2018/19 - with the broadcaster deciding whether the policy should continue after 2020.

It may in return be able to extend the licence fee to cover people watching via the online iPlayer, and the licence fee is expected to rise in line with the consumer price index (CPI) measure of inflation.

Budget so far

Banks including RBS to be returned to private sector faster than expected, with sale of Government assets delivering record privatisation proceeds this year.

Budget surplus to be achieved a year later than planned in 2019/20, but the national debt will be lower and the surplus larger than expected.

Rises in public sector pay restricted to 1% per year for the next four years.

NHS to receive a further £8 billion by 2020, on top of £2 billion already committed.

HM Revenue and Customs to receive extra £750 million to go after tax fraud and evasion, with the aim of raising £7.2 billion in extra tax.

Non-dom status abolished for people born in the UK to parents domiciled here. Permanent non-dom tax status to be abolished with anyone resident in the UK for more than 15 years of the past 20 years to pay full UK tax from April 2017, raising £1.5 billion.

New bands for vehicle excise duty for brand new cars from 2017 - with most cars paying £140 standard charge. No change to VED for existing cars.

Fuel duty to remain frozen this year.

New apprenticeship levy on all large firms.

University tuition fee cap to be linked to inflation for institutions offering high-quality teaching.

Government “working towards” deals with Sheffield, Liverpool and West Yorkshire regions on “far-reaching devolution of power in return for the creation of directly-elected mayors”.

Counties and elected mayors to gain power to set Sunday trading hours in their areas.

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